Eric Voyles 0:00
Not to mention all of the companies that have sprung up around here that manufacture transportation equipment. Big Tex led well, Texarkana specialty electric vehicle, there’s a we have a wave of fire equipment manufacturer in the area. I mean, it’s just, it’s amazing the amount of breadth and depth that texture can have this little community has in transportation manufacturing, with 34 times the number of companies than us average in that category.
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J Darrin Gross 0:53
Welcome to commercial real estate pro networks, CRE PN Radio. Thanks for joining us. My name is J. Darrin Gross. This is a podcast focused on commercial real estate investment and risk management strategies. Weekly we have conversations with commercial real estate investors and professionals who provide their experience and insight to help you grow your real estate portfolio.
Today, my guest is Eric Voyles. Eric is the Executive Vice President and Chief Economic Development Officer of Tex America Center, which operates one of the largest mixed use industrial parks in the United States. in Texarkana, Texas. And in just a minute, we’re going to speak with Eric about the COVID effect and the opportunities created from COVID in rural markets in an in an industrial and flex space properties. And, but be first. But first, before we do that, I would like to ask you to take a minute, if you would like to help our show, CRE PN Radio, there are a couple things you can do. You can like, share and subscribe. And as always, we encourage you to leave a comment. We’d love to hear from our listeners. Also, if you’d like to see how handsome our guests are, be sure to check out our YouTube channel. And you can find us on youtube at commercial real estate pro network. And while you’re there, please subscribe. With that I want to welcome my guest, Eric, welcome to CRE PN Radio.
Eric Voyles 2:28
Well, thank you for having me, Darrin.
J Darrin Gross 2:31
I’m looking forward to our conversation today. Before we get started, though, if you could take just a minute and share with the listeners a little bit about your background.
Eric Voyles 2:40
Sure. As far as tax America center goes, we are a state of Texas Redevelopment Authority. So we are a special purpose district quasi governmental entity of the state of Texas, very similar to like an airport authority which has a very specific mission. Our mission is to redevelop former military property here in Texarkana in Texarkana at one time had two military bases, one has completely closed, the other one has been right sized. And so we are endowed with very specific operating capabilities. In an effort to bring that property back, we we have the ability to approve our own building permits our own zoning. So really, when you’re talking with a staff member here, you’re talking with the decision makers, who will decide when it comes time for permitting whether or not you get the permit. So where it may take six months to go through a an entire process of getting permission to build. In theory, we can approve your occupancy your building permit within, you know, a 24 hour time frame. So I mean, it’s just a completely different way of doing real estate development. Me personally, I come out of the economic development world I’ve always dabbled in real estate. But this this is this is a big step in terms of getting into more of the commercial world. We are not tax supported. So I manage a lease portfolio of 1.1 million square feet. And we’re actively working to add to that. We’ve got 3 million square feet total. So I’m still trying to lease 2 million square feet of space. And we’re adding to that we’re building 150,000 square foot spec building 32 foot high clear height. Modern as can be can be subdivided, but so we’re adding more product to the portfolio that I’ll manage. But that’s that’s kind of that’s kind of us I guess I final comment would be, you know, we always try to describe ourselves as being very much business. So just like any one of your listeners, you know, that are in the business world they eat what they kill, were the same way we have to lease we have to sell, which means we’re going to be very competitive, very aggressive and making deals happen on the property.
J Darrin Gross 5:17
Well, that’s an interesting concept. I’m really looking forward to hearing more about this. So the the, the entity, the Texarkana America’s, is that the is that the one that holds title? Or are you a lease operator? You said you’re taking out or you’re working with military or retired military bases? Is that right?
Eric Voyles 5:43
Yeah. So when the United States Army, or really the federal government in general, but specifically our property was was army property, when, when the Department of Defense or one of its under groups, decides that they have surplus property, they just can’t handle it like a regular business and, you know, dispose of it. So they go through what’s called a BRAC process, a Base Realignment and Closure process, it’s a political process. And by the time that they go through this complete analysis, they have a list of multiple properties that they no longer deem viable. And then they they have the issue of how do we get rid of it, and and that whole process takes years to go through. And the easiest way for them to dispose of it is to give it to the state where the military base is located. And so when they decided to shut down the Lonestar army ammunition plant here, and then right size, the Red River army Depo, they gave all that property to the state of Texas State of Texas then created legislation allowing for a county to form and what’s called an L RA, or local Redevelopment Authority. And so our county formed, initially a group called the Red River commerce Redevelopment Authority. And we took the first amount of property which was 765 acres and about 750,000 square feet. And that’s where we began from. And so we began leasing and transacting ground immediately, the property was in great shape. And so it really was viable for quick redevelopment. And that generated our initial operating capital, the next BRAC that we went through, resulted in 2.3 million square feet of space coming to us. And an additional, I guess it was a little over 11,000 acres, and large amount of that was environmentally damaged. And so we began going through the process of getting all of those properties set up to have a no further action letter. And we just got confirmation that the record permit has been removed off of the final 6000 acres. And so they’re they’re still three locations on our property, roughly 100 acres each, where the army is responsible for doing some additional cleanup, but we’re at over 11,000 acres of developable, transactable property at this point, a large amount of it, but more than half never had environmental issues whatsoever. The other half had perceived issues, because they were in proximity to these three locations. And so we had to go through the entire review process. But they’ve all come back with clean bill of health, we have no further action letters. And like I said, we just got the record permit removed on it. We’ll be making that formal announcement probably in February in February. But it puts us in a great position to keep moving forward. We’ve invested literally millions of dollars to get that property to the point where we can transact it.
J Darrin Gross 9:07
Real quick, I’m just curious on the environmental issues, can you speak a little bit what that mean? No, no, yeah,
Eric Voyles 9:15
it’s really interesting. So if any of your listeners are familiar with munitions manufacturing, but the property had what they called load lines, and these load lines were about 100 acres, where they would have where they did manufacturing of how its around. Patriot missiles, 50 caliber machine gun rounds, grenades. Me if it went boom, and the United States Army used it. It was probably made in Texarkana at the Lone Star facility. So you have this this 100 acre location that sets inside of somewhere between five to 700 acres and that’s just all buffer. And it’s, it’s called a blast Ark. And so what we what we initially did is we went to that buffer area, which was all pristine forest property. And we had all of that surveyed, and it was determined that there were no issues with it. So that was the first pieces, then we went back and looked at each one of the 100 acre complex of which there were five. And those five, we did an in depth analysis on those, there had been asbestos of, you know, roof shingles ahead blown off. So we had all of that cleaned up, there was lead paint, the lot of the lead plate paint was was cleaned up appropriately. And in a couple of small places, there had been environmental damage from maybe chemicals that had been poured into a well system. And so the pipes had to be completely removed from the the the premises so all that was dug up. And little by little over a near 15 year timeframe, every one of these issues was resolved other than these, these larger areas, Rio, which where they would do demolition of materials that that were defective. And so those those are still being worked on by the army, but they’re contained in about 100 acre tracks on the the 9000 acres that made up the Lonestar army ammunition plant. So we’ve we have a full consensus with the Texas Commission on Environmental Quality, as well as the United States government that the property is up to the appropriate remedy for remediation and have the no further action letters. And the record permits have been removed, which that that’s been the big push, the first 2000 acres came off in 2015. And this next over 6000 acres is coming off now. And then there was about 1000 acres of right away that never went into the record permit as well. So that that constitutes really the balance of everything on our East Campus. But we also have a central campus, which is the original 765 acres. And then we have what we call the West Campus, which is 2900 acres. That was all with the army called the expansion parcel in case they got additional mission. So it’s it’s it’s really pristine farmland that we’re also developing there. So we it’s, I’m sure I’m losing your listeners, because it’s 12,000 acres, if it was all residential, we could put over 150,000 residents into it. I mean, it’s it that’s, that’s the size,
J Darrin Gross 13:05
I’m gonna say that the the size of the acreage is, is not what I would guess most people unless you’re a farmer or forester have some sort of a sense of, you know, large scale land. Some sort of comprehension, I’m just trying to think are all of these contiguous the west central in the East campuses.
Eric Voyles 13:24
They’re within say, a couple of miles of each other, because right in the middle of it is still yet the Red River army. Depo what remains of it. Okay, in that Depo it’s one of our just reset missions in the country. So that’s one of the interesting things about Texarkana is we’re a huge automotive manufacturing community, but we’re one of the largest ones you’ve never heard of, you know, there’s 5000 people working on that Depo every day rebuilding Hummers and, you know, you know, the Army’s equivalent of a semi tractor trailer, which called the Hemet. So there’s, there’s all of this military equipment that every day they’re stripping all the way down to the frame and then rebuilding them and then returning them to theaters where they are, again used for operational purposes. And we have that full skill base. And not to mention all of the companies that have sprung up around here that manufacture transportation equipment. Big Tex lead well. Texarkana specialty electric vehicle, there’s a we have a wave of fire equipment manufacturer in the area. I mean, it’s just it’s amazing the the amount of breadth and depth that techs are can have this little community has in transportation, manufacturing, we have 34 times the number of companies than us average in that category.
J Darrin Gross 14:57
Fascinating couple Things that I want to touch on real quick. You mentioned the time I mean, 15 years It sounded like to go through the environmental checkoff and just between the the BRAC system there from the government saying, Okay, we’ve got one too many. We don’t need this one anymore. And then for Texas to acquire it and then create the authority. Can you give just a rough gauge on how when did the maybe you set the date? I didn’t didn’t? When when it started to get to where you are now? Yeah.
Eric Voyles 15:29
So the first BRAC, because we’ve gone through to the first rack occurred in 1995. By 97, the Texas State legislature had created the legislation allowing for a county to form an L Ra. By 98, our county had formed the first l Ra. And by 2000, we were fully staffed and starting to do transactions, and we really became financially viable as a company, then in 2001, then in 2005, the next BRAC move through, and that’s the one that shut down the entire Lone Star, the first one just right sized portion of the Red River army Depo, then the 2005 BRAC close the Lone Star army ammunition plant. And by 2010, the property had been transferred to us. And we began the process of doing environmental cleanup at that point. And the first amount of the property that was on that record permit with that new property than the 9000 that was affected by by the record permit of the full 11. The first 2000 came off in 2015. And then this last chunk, 6000. And some odd came off in January of 2021. It just happened within the last two weeks. So that’s where we are.
Now in the meantime, we began leasing existing space. And when I got here in 2014, we had about 580,000 square feet of existing buildings leased. And we now have right at 1.1 million. And that’s a result of our continued investment in infrastructure. So on that East Campus, some of the things that made that possible is we brought 144 strand fiber onto the property. We brought in high capacity natural gas through a third party group that works directly with enable midstream, and is our supplier where Centerpoint does most of the supplying in the rest of Texas, we brought in a specialty group to work with us on industrial, so their pricing is better than centerpointe for large commercial users or industrial users then what you’ll find with what centerpointe has available, we also worked with local electricity supplier, which is owned by ATP, the electronic electric holding company. It’s the local company is Southwestern Electric Power Company swepco. And their rates are about 80% of the US current average. And so we’re a low cost location for electricity. Because of that, and then water and sewer. We worked with the federal government we got an ADA grant to extend the water and sewer lines. We also got a state of Texas Capitol phone grant to also participate in extending water and sewer on the footprint, all tied to a job creating project that we brought on to the property. A Spanish company named Max Sam. They had a US subsidiary called x pal USA that we were successful in landing is about a $24 million project in 2017. And so that helped us, you know, warrant the grants to extend the utilities. But once we extended the utilities, we were able to start running utilities back to a lot of the buildings where all the utilities had been shut down when the army vacated the property. So there was a complex of buildings 270,000 square feet, that as soon as we got utilities to it, we leased 11 of the 12 buildings in nine months. brought in x pal took one of the buildings we brought in a company from Michigan called lock performance or their defense company and then we brought in a Solar energy company provides componentry called array technologies. And they went into several other buildings as well. So, you know, little by little as we invest in the property, we’re getting it to a point where we can transact. And that’s what’s so exciting about getting the work permit removed. We’re at a point where, where we can transact. And that’s, besides the fact that we’ve grown in the last six years, we grew lease square footage from 580,000, square feet to 1.1. We also now have more ground that we can build. We’ve leased most of the quality existing buildings that we have. And so we’re building so that we can keep creating jobs for our local citizenry.
J Darrin Gross 20:47
You so you take over a military base, my experience with military bases is that they’re fairly well maintained? I mean, is that did you find that everything was in in good working order with the exception of some of the environmental stuff?
Eric Voyles 21:04
Yeah, it’s just that the buildings were all built in 1941. And so they’ve been maintained. But they were the I’ll say, functionally obsolete. The warehouses were were would have been excellent if someone needed a 270,000 square foot transload operation, because there was rail on one side and three dock doors on the other. And, you know, we just didn’t see a need for that type of operation in our market. So we had to adapt them. So what we did is, we went in and made sure that they were going to stay nice and tight, we put new roofs on them. We went in, we added two small offices, a break room, a bathroom and it closet. And that’s how we started marketing them. And as soon as we made made the investment, reconnected utilities, because again, you know, the sewer was 80 years old, I mean, it was collapsing. So those are the things that the army didn’t want to reinvest in. But those are some of the most expensive, it’s what you can’t see often is what’s most expensive when you go about the process of doing redevelopment, and it’s no different whether you do it small scale or large scale, you know, the old adage on residential, you wait till you tell him tearing the wall, then you know, because you can’t see on the wall yet. 30% whatever your cost estimate is. So we deal with the same thing. And as we got into it, this you know, when we took it over, we were told the sewer operates. Well, that was true. But when we did our i&i study it we were losing about 500 gallons of waters a that was disappearing through cracks in the in the water lines. And so we had to shut everything down completely rebuilt water and sewer systems, the electrical system was was antiquated, it didn’t meet modern standards. So AEP had to completely rebuild it when they took over the electrical system. On our footprint, there was no gas because you can’t you don’t want to mix open flames with TNT. And so they had steam, heat, that that heated buildings, and they used in their process, but now we have gas on. And then in terms of the fiber, you know, fiber was just happening as they were deciding to shut this down. So the the it investment wasn’t a quality one, it was here, and it was a very limited fiber line. And so we came back in with something that was data center quality. So you know, 144, stran can move over a gigabyte of information. And we can do it at a pretty cost effective way. And so we really tried to limit risk for potential tenants with the way that we’re investing in infrastructure. And in addition to that, we spent a lot of time creating incentives, there were no incentives on the property. And so now we have the ability to put an incentive package together that compete with most industrial parks, whether in the state of Texas around the country,
J Darrin Gross 24:14
I’m gonna say that bringing in the infrastructure there and having that all current up to code and stuff, I’m guessing would be very attractive to a lot of companies looking to relocate or looking for space. If you’re looking at something that’s old and antiquated. As opposed to, you know, just having the technology and, and the convenience of, you know, enough power or whatever it is you need. makes life a whole lot easier to do. I want to ask you because I’ve had the pleasure of driving across the country a couple of times, and I learned a little bit about Texas. It’s a big state. There are places that I’ve had to pull over and wait for the gas station to open up Cuz we were just too far in between the places that had gassed. And they weren’t gonna open till you know, when the sun came up. But my my, I guess my question is this is that military bases in my experience have historically been located for obvious reasons. Not on the edge of town, but maybe further out especially there’s a lot of munitions and that kind of thing. In this case, it sounds like there’s enough acreage that they could have maybe been closer to town, but what what’s the population surrounding the, the, you know, the space that you guys occupy now, is it? I mean, it’s your rural, are you not?
Eric Voyles 25:46
Yeah, we absolutely are rural. We’re probably one of the largest rural communities that you’re going to run across. in, in, in because of the way that we’re situated with a state line running through our communities, we actually appear smaller than what we are. So the USDA considers the communities here as rural, as well as the counties in the texture catchment area as rural. Now, our community is actually about 70,000 people, but the state line of Texas and Arkansas runs right through the middle of Texarkana. So you have a Texarkana, Texas with a population of 35,000. And you have a texture Canada, Arkansas, with a population of 35,000. And so that qualifies us for all of the USDA, business and industry programming that make it attractive, such as a loan guarantee program that’s only available in rural markets. So even though we have a larger population base or labor force than what you’ll find in many rural locations, we still meet all of those rural identifiers that are needed to be able to use some of the federal programs to help with business development activities for companies that are trying to expand or relocate.
J Darrin Gross 27:20
With the state line running right through the middle there. Did Arkansas have to create a similar type of structure for their portion? Or did how did that work?
Eric Voyles 27:30
That’s a good question. So because we’re located in Texas, we there’s no counterpart doing that kind of redevelopment, because there are no military properties. On the Arkansas side, we’re just on the Texas side. Now, as a region, we did create a regional economic development group two years ago, and they are helping to market the overall region to businesses and help explain who we are to site search consultants. And so that’s, that’s helping drive additional activity into the market.
J Darrin Gross 28:06
Alright. And as far as the the major industry in the area was the bass has historically been the main employer.
Eric Voyles 28:15
Oh, without a doubt. And this is this is part of what we’re hoping to replicate or reproduce, I should say. But in this, I’ve, we’ve only been able to find historic records for one of the base that talked about maximum employment. But the Lone Star army ammunition plant in the summer of 1969, had 19,000 people working at it. And so there were buses coming from Fayetteville and Little Rock and Shreveport all the major communities and that they were they were working for 10 shifts. And so they would be here Monday through Thursday. And so there was a lot of transient housing that was available close by, and then they would go back home for three days back, you know, wherever family was, and so it kind of put in place, a very common practice here, that people drive along distance to go to work. Even now, if if you look at the labor data for buoy County, and that’s the county We’re located in. The second largest concentration of employees working in buoy county drive 50 to 75 miles every day to come to work at the employers in buoy County. Yeah, that’s four times us average. I mean, that’s, that is statistically significant, that we have that kind of commuting pattern. But part of the reason is as you start to look at where the Other major employment centers are there hundreds of miles away, you know, Dallas is 160 miles to our west Little Rock is 160 miles to our east, Fort Smith is 190 miles to our north. And so that demarcation point between all them is about 75 to, you know, 85 miles before it becomes economical to drive to the other location every day, then come here, and we have just a plethora of communities out there that have 4000 people, 6000 people, 7000 people. And so, you know, for instance, our 75 mile radius around our property has 1.1 million people living in it, you don’t see that, when you look at a map, because all of the communities are literally four to 15,000 people in, but they got to have jobs, you know, not everyone can make a living, you know, taking someone fishing up on, you know, Grayson lake. So there are people that drive into the major employers in Texarkana every single day, and they earn a great living doing it.
J Darrin Gross 31:18
No, I appreciate you kind of give us a little, you know, sense of the geography and the population dispersion there. That’s, that’s, you know, compared to most, Metro or even, you know, secondary, or even tertiary markets, it’s a considerably different structure than the rural market, where you have such a, you know, a distance between people and, and, you know, I said they all need jobs. And just to kind of a different mindset. So, let me ask you, so we’ve established that you guys are rural your way out? You have a, an enormous plot of land, you’ve got buildings that are leased, you have buildings that are for lease, you’ve got ground, are you selling ground as well? Is that what I what I understood?
Eric Voyles 32:10
Yes, we are we are. So what we do with that is we go through a certification process. Let me, for instance, we have what we call our star site, it was the very first certified development ready site through the Texas Economic Development Commission. And what we did is, we spent around $60,000, with an outside engineer, to help research the site to confirm that it is ready for development. That’s what star stands for sites that are ready. And they designated us the first site in the state of Texas to be certified, that it’s development ready. So now that we’ve gone through that, we have our own engineer on staff. So having his own PDE, what we’re going to do is transition to qualified sites. So we’re going to do all that analysis internal, and these sites are qualified to be certified if we wanted to spend all that money to have a third party validate all the work that we’ve done. And you know, it’s just, it’s just gonna, it’s the same process, he’s still putting his p stamp on it. So he’s at risk for F anything he says is not, you know, true to the marketplace. But we’re just we’re just not going to pay a third party. To validate the information that we’ve done. We don’t feel that that needs to be done. And the second site, the our first qualified site, is the 24 acre site, where we’re building our first spec building. So we went through the process to get it qualified. And then we immediately chose to build 150,000 square foot spec building on it. The next site that we’re going to do is I think it’s an 18 acre site, and it’s REL served and it sits directly adjacent to this 24 acre site.
J Darrin Gross 34:10
You’ve mentioned rail multiple times. A couple of what’s the interstate that’s nearest?
Eric Voyles 34:21
Yeah, no. Great question. So the transportation network that we have is pretty robust. We have three interstates that serve Texarkana. I 30 is the oldest and most complete. It runs from Dallas to Little Rock, and then from Little Rock. It runs on to Memphis and you know, and then from hit Memphis, you can get anywhere on the entire eastern seaboard. We also have I 49. Connecting to see 49 is complete from Texarkana to New Orleans. There’s about 180 miles of I 49 to be built replacing the two lane road that is us 71 but I 49 is complete from Fort Smith to Kansas City and then when you get to Kansas City, it forks out and serves the all the way up to Canada, the whole central portion of the US and Canada. And then the other interstate that’s currently being built that will run through texture Canada is I 69. I 69 is complete from Canada. It crosses by Detroit comes down all the way to Evansville. And it currently is complete through Houston. It will there will be three legs that will come out of Mexico converge just above Corpus Christi, run to Houston and then run all the way up to Texarkana connected i 30 i 30 will be the de facto I 69 bed back to Memphis and then there will be a leg from Memphis to Evansville. There’s all where there is not it current interstate there is four lane highway serving a lot of it. You know so you have a US 59 that runs from Texarkana to Houston right now. Most of it is four lane. But it’s it’s you have a lot of controlled access points along the way. And so but still, the speed limit is 75 miles an hour on it. So we great connectivity. From a rail standpoint, we have two classrooms that serve our overall market. And two short lines. The Union Pacific in Kansas City Southern Connect here BNSF has operating rights in the region, as well as with the two short lines are both owned by the world’s largest shortline holding company, the gn w which is part of I think it’s called Brookfield now and they are the kiamichi and the teener. The Texas northeast are our property is directly served by the up and the shortline teener. So we have dual access one through the the shortline and the other one through class one.
J Darrin Gross 37:03
What about air field? Do you have a is there an airfield on on the property
Eric Voyles 37:08
and not on our property? Well, we have a helipad on our property. So you know, it would be great for drone manufacturers or, you know, someone wanting to do helicopter repair or building helicopters. But anyhow, we have our own commercial airport. It’s on the Arkansas side of Texarkana. TX K is callsign. And we have three flights in and out daily COVID knocked it down to two, but I think they’re supposed to go back up to three, starting either and I think it’s February. And then within driving distance, and of course driving distance, I think of it from a rural Texan viewpoint, which may or this may sound absurd to some of your people. But you got to remember, we drive three hours for football games on Friday nights and three hours back home. So we’re kind of used to driving here, but we have the Shreveport Regional Airport. That’s about 75 miles away with 12 direct flights around the country. The Clinton National Airport and Little Rock has, I think it’s 52 direct flights around the country. That’s about a two and a half hour drive. And then about a three hour drive back to Dallas get you to both DFW international and loves field. DFW is I think it’s the fourth or fifth busiest airport in the world and loves field as a major Southwest location. And so tremendous capabilities DFW last I checked I think was 212 direct flights around the world. So and DFW is our hub. So you leave texture Canada, you’re at Dallas, and then you’re wherever you need to go around the world.
J Darrin Gross 38:56
I was just thinking from from an airstrip thing. I thought maybe perhaps the military base may have had some sort of, you know, it makes sense being an army that it would have the helicopter pad, but I was just it’s such a massive plot of land. It it just seems like wow, you could you could, you could essentially have that and that could have been something that the military use and that would have been interesting, but so Okay, so we’ve got plenty of rail, we’ve got plenty of Interstate access, you’ve got the surrounding airports, you’ve got all the acreage you’ve got the the buildings that you’ve built, you’ve got the sites that you’re preparing to build doing some spec build. Tell me a little bit about the are these tenants or what do we refer these because if you’re leasing the space, I would simply call them tenants but if you’re selling space, talk a little bit about the mix of the different businesses that are occupying or are taking up residency on your on your In your campus, and then also, if you could talk a little bit about the size of space from, say, the smallest lease space to the largest?
Eric Voyles 40:11
Sure, absolutely. I’ll kind of do the same thing with our tenants. I’m just going to pick two to talk about. But realize that we do a lot of work with the defense industry. But our tenant mix, I think we have 28 tenants on the property right now, leasing the 1.1 million square feet. The one of the smallest is a local company. It’s it’s a fun story, lady named Jill row, decided that she was going to start making you know her own medicinal supplements to help her with some healthcare issues that she had, and researched and came up with her own recipes, began making the supplements in her kitchen.
And then she started giving them to friends. And then when friends kept coming back and asking for more, she started charging for the supplements. And the next thing, you know, she takes over one of the kids bedrooms, then she took over the garage, then one of the local churches in town offered her the use of the kitchen in the church. So she moved everything into the church. As she started to make it a business there, they realized what that her business was growing more than what they really could afford as a church. And so that’s when we got involved. We had a familiarization tour, and her banker came out to look at what we had to offer. And what was the next day he and I got together. And we talked about what they were really trying to make happen. And by the end of the week, we were at the church looking at what their facility was. And I had 175,000 square foot building that had not been retrofitted since the army was in it was the old kitchen. And it had been demoed out. And the colonel have on the base at some point had used it as his personal garage. And so it was it was just a nasty shape, you know, horrible shape, but it was it was the right size for them. So recognizing that, you know, this is a perfect kind of job producing project, you know, fits the, the mission of our organization, we put together redevelopment plan for it, I invested about $250,000 to get the building up to FDA compliance, and they couldn’t afford for for their to, for everything that we needed to do. So we, we kind of ate some of it in order to make sure that we could help the company expand. And so our breakeven won’t come until about year seven on a five year lease. And, you know, that’s that’s just the way that that you do things in a small town. And so, you know, she’s she’s created 20 jobs on our footprint. Before COVID they were just growing like gangbusters. You know, but we’re hoping that that growth trajectory returns once COVID crisis is over, they’ve had to move into new product that’s more in demand because COVID in so it’s probably in the long room, made their company stronger. But they were they were growing at double digits per month prior to COVID. Hitting. And it they were just amazing company, row casa. And so that’s, that’s kind of the small end of what we do. The other one of the big projects we won last week last year, is we worked out a way to work with the Red River army Depo and Lockheed Martin to put Lockheed Martin into one of our buildings. It’s the largest building we have, um, it’s 256,000 square feet, and the Depo had to lease it. And then they did a sublease to Lockheed Martin. And so we’ve got them in there. They, we did about a million dollars worth of upgrades to the building for Ford to get them in. But it’s a market rate lease and, but, but we made it happen. And you know, we’d love to keep working with Lockheed and we’re in constant conversations with him about what we can do to keep them here doing more work with the Red River army Depo but that’s kind of the opposite ends. It kind of you know, the real cost of buildings. 4750 square feet. It’s not smallest, I actually have an office that’s 1140 square feet that I’m trying to lease. But certainly the building that Lockheed went into is our largest. The building we’re building now, it’s 149,600 will be the second largest building we have. And after that, we’ve got 125. That’s least, then we have a 75. That’s the least, than the largest that’s available as I’ve got a 22,150 square foot building available. Right now, that’s one of the old, what we call area d warehouses, where I mentioned earlier, where there were 12 buildings, and we leased 11, I still have one available.
J Darrin Gross 45:45
So tell me a little bit about how COVID has affected. You mentioned, the one tenant and and, you know, sounds like they’ve, they’ve had to kind of shift gears a little bit but sound like they were on a pretty good growth trajectory. Yeah, you speak to have any opportunities presented themselves? Have you had new interest in in your facility in your, your buildings? Or?
Or, you know, can you speak to any of that based on COVID? And perhaps some sort of a rural migration from previously, you know, more of an urban? Maybe? location?
Eric Voyles 46:27
Sure. Yeah, man, I can’t mention the company. But we are talking with an e commerce fulfillment center that’s looking at consolidating operations. They’re looking at Memphis, they’re looking at Phoenix, they’re looking at San Antonio, they’re looking at Dallas, and they’re looking at Texarkana. I mean, we definitely are, David, in this scenario, you know, these are all major players in major markets. But what we bring to the table is willingness to put up a brand new building, where they can get into where there are other options are going to be older structures many times. You know, our newer building will have some tax advantages with it. much lower cost because of the ability for us to not have to pay sales tax on the materials that we use in the construction. So you know, you can get a newer building it a little bit lower cost. And then all the incentives that we’ve brought to the table, we are a US opportunity’s own, we’re a new market tax credit eligible location. We are a HUBZone. If you’re doing business with the federal government, we are a Foreign Trade Zone which we manage ourselves. We are a Texas Enterprise Zone, we are a Texas reinvestment zone, we are a Texas defense readjustment zone, we have goods and transit tax exemption, we have Freeport tax exemption. So, you know, these are big ones. And then you know, there’s there’s training programs that we can bring to the table. What you know, Texarkana College has a vocational school on our campus. And so, you know, someone has a need for training, not only can we help with getting funding for the training, but we’ll bring the director of the of the team, it’s called TC attack, we’ll bring the director over, and we’ll make sure that we understand what your syllabus needs to be. And we’ll be your training partner through our contacts with Texarkana college, our junior college here. So, I mean, we really have tried to make ourselves as kind of a partner in your development process. And we do this to help eliminate risk, because that’s what site selection is, it’s all about mitigating a risk, whether it’s going to be political risk, financial risk, where we try to help you make it easy to operate here.
J Darrin Gross 48:58
I was gonna say all of those tax incentives and a new, a new facility and all that if it’s somebody looking to locate in the middle of America, we think that you guys would be, you know, up in consideration. Can you speak at all to wage comparison? How do wages compare in the area as opposed to, you know, your nearest Metro 10 of Dallas or something like that.
Eric Voyles 49:23
Now, if we get hot, this is going to change. But our wage rates are about 80% of the Texas average. And that’s just because we just haven’t had the same wage pressure, as you see in Dallas, or Houston, San Antonio type location. So for the companies that are here now and the ones that are coming in now, with great operational environment, we need to right to work state and, you know, at a lower cost.
J Darrin Gross 49:57
Have you seen any element outside of the texture, texture, texture is Tex America as well as over calling forget the
Eric Voyles 50:07
taxi, Marcus and reassurance works.
J Darrin Gross 50:09
Is there any development going on outside is as far as like new construction or residential properties? Have you seen a migration of people recognizing? Or mean? Are there enough jobs in tech? America?
Eric Voyles 50:24
Yeah. So our population is growing. It’s, we call it stable to growing. But we grow just a hair over about 1% per year, for the metropolitan area. You know, we’re not on that same growth trajectory as a as a Dallas or something like that yet. But as as we keep adding companies into the market, we’ll see that go. But But yes, there have been new subdivisions and seven years that I’ve been here that have opened and sold out. Now they weren’t 200. You know, you’re not gonna see a 200 home subdivision come into texture candidates. It’s probably more like a dozen. But I’ve seen those places completely build out.
J Darrin Gross 51:11
Well, I think just something affirming that there is growth is kind of what I would expect. I mean, if you’re if you’re an economic center, and you’re attracting jobs, that I would think that that would be a natural attraction for people that need jobs and
Eric Voyles 51:26
crying. Yeah, Cooper tires here and they’ve expanded within the last seven years. Downtown is here they’ve made major capital investments into their facility. International Paper sold their facility to graphics packaging, but prior to that, they made a major investment. The there was aluminum plant here that was dormant when I arrived it Chinese company called top chain and bought it have invested back into the facility and they’ve actually started to bring in some companies that are doing work with them. And so a another, I call him a competitor, but they’re not really they kind of focus more on the smaller projects we’re working to try to bring in larger ones. But the Nash business park has seen a tremendous amount of growth that sits right adjacent to that facility, but they did just land one of the the large processor companies that will be taking product coming out of the mill and reworking it before selling it off. So So we’ve seen a fair amount of investment in the market. A United Technologies company that does railcar work for them, that gets called UT x opened a dormant GE facility that had been dormant here on the market for a while and really brought by 450 jobs in doing railcar repair, a local company called tech Santa did a major expansion. They also do railcar repair, it goes back to that, what I mentioned earlier about all the transportation manufacturing in the market, you know, just amazing number of skilled individuals in our market doing that kind of work. And I want to mention this, our partner, Texarkana college, really has done a wonderful job of working with these industries. They, you know, we generate one of the third largest certificate programs that we have necklace, like nursing, is in welding. So we generate a large number of welders. That’s always a skill category that’s not available in markets, but we produce a large number and recognizing that the future of manufacturing is in advanced manufacturing. They just launched a large vocational school at the main campus where they’ve brought in robotics training, they brought in solar and wind technician training. They’ve brought in CNC on a couple of different machine training PLC programming. So we’re moving now since we have the basis of automotive covered we’re trying to get into component part manufacturing for several of the industries that are a great connection to what we already do well around transportation and I really applaud our our new president at the college for recognizing that we need to keep driving manufacturing forward here and tape texture Canada we have 18% of our labor forces involved in manufacturing you know well over twice the national average.
J Darrin Gross 54:47
Oh, that’s fascinating. All of the the, you know pieces you have aligned to you know, even the community you mentioned all the education focus to train The talent to be, you know, a man attractive hire, for all the businesses you’re trying to attract, you know, all of the tax incentives, all of the facilities that are that are updated, or, you know, potentially new. It’s a very attractive setup you have, and I’m certain that, you know, the way things are gone, I think that, you know, COVID is, has pushed out a lot of some of the urban I know, some of the the metro areas that been written about and kind of witnessing firsthand are struggling, people are looking for space, a lot of the retail type stuff is has picked up speed online, which is kind of, you know, it’s reduced the necessity for a traditional brick and mortar store, but it’s increased the need for your distribution, kind of thing. So I would think you guys are, are well positioned for a bright future.
Eric Voyles 56:00
That one of the things that we also went after that I think is important with what you’re saying is we set up a third party logistics business unit. So for the companies that maybe need a facility, but they don’t want to have their people involved in it. And they want to outsource that, we’ve created our own three PL capabilities. And we hired a top guy he’s done work with am General, he’s done work with Mercedes, I could go on and on with the big e commerce fulfillment applications. So that’s, that is a new launch in October, but brought in we decided to move forward with it because of COVID, we think that there are going to be companies that have chosen to do things different, they’re going to be wanting to still yet access the markets in this part of the country, but they may not want to have the risk of their people handling and being exposed or exposing others.
J Darrin Gross 57:01
Well, in being centrally located, I think gives you a leg up, you know, I’ve dealt with clients that were importing and and, you know, struggled with distribution. They had the the West Coast, the East Coast, but the Midwest, they were trying to figure out where to, to locate. And, you know, it’s it’s not always a well, I would think that you would, you would have a lot of flexibility given all the space you have and all the things we’ve talked about. Eric, we could like shift gears here for a second. As I’ve mentioned to you before, by day, I’m an insurance broker. And I work with clients to assess risk and determine what to do with the risk. And there’s three strategies we typically look at, we look at first to see if we can avoid the risk. If we can’t avoid it, we look to see if there’s a way to minimize the risk. And then if we can’t avoid nor minimize the risk, we’ll see if we could transfer the risk. And that’s what insurance policy is. And I like to ask my guests if they can look at their own situation. I look at your clients, investors, tenants, the market, etc. However, how you want to identify them the risk. But I’d like to ask you, if you could take a look at your situation, and identify what you consider to be the biggest risk. And for clarity, I just want to make sure that, you know you recognize I’m not necessarily looking for an insurance related answer. But if you’re willing, I’d like to ask you, Eric Voyles. What is the biggest risk?
Eric Voyles 58:48
For you? No, I’m looking at it from the perspective of my clients, you know, the people I work with their biggest risk is potential for failure. And if you fail, when you expand many times you drag your entire company down with you. And so I always try to help people understand that not only is being in charge of an expansion if you’re in a larger company, a potential career limiting assignment. But, you know, you you could you could actually if it’s your own company, you know, you could have complete financial failure of your business, if you make the wrong choice. And so that’s why we focus most of what we do. I’m trying to help people drive down that risk of relocation. You know, we began the process I mentioned I come out of economic development. So we began the process of once I got here of assessing the property. We looked at what are our costs, and really have tried to understand our cost structure. Then we’ve and we’ve tried to understand what companies need that structure. Then we’ve tried to understand what, you know, the political risks that might be involved with our property. And so there weren’t really incentives available. So we have worked aggressively to put incentives on the footprint that you can get access to. And again, that that kind of ties back to financial. But you know, it also demonstrates that we are 100% committed to your company, to work with you, in the long run to achieve not just profitability, but stabilization in the shortest time frame possible, then we’ll work with you to grow profitability. So all of this is really important when people are making decisions, we try to understand our market so that you can build a business plan that you can have confidence in, you can take it to the bank, you can take it to your board of directors. So you know, we many times are helping people collect the data that they need to put into their business plan. And you know, if it’s good, and you can make your decision favorable for us, that’s great. If if it doesn’t match up to something else, that’s great, too, because we’ve helped you make a decision. So you can move on, it allows us to focus on other things. So my entire our entire thought process in this is risk mitigation. And by doing this, when someone decides that we’re the right place, what we’ve seen is those companies tend to be successful, they usually are willing to come back and provide testimonials for us about what we’ve done, that they didn’t realize they needed help with at the time, but the things we did made a difference in their startup and their stabilization and in their long term profitability. So that that’s what we focus on. I think that is the biggest issue that that corporate executive or that business owner has to address when they’re trying to expand, they need to think about what are the risks associated with making this decision, and they need to choose the right place.
J Darrin Gross 1:02:13
Oh, that’s, that’s a need to know that you guys are so invested in in, you know, essentially partnering with your, the people that are located with you, you know, on your priority, and in choosing to relocate, that’s, that’s a pretty impressive.
Eric Voyles 1:02:29
Throw out one other thing, because we also have tried to carry this over to the commercial real estate world. So one of the things that we do that I’ve never been able to do any other place I worked, we actually pay commissions on the deals that you bring to us, I have a non exclusive listing agreement. And so when a commercial real estate agent comes to us, if they need an NDA signed, it’s available for download on our website, as is our non exclusive listing agreement, but but we tell you on the front end, we will pay you a commission, we just need to get under contract with you for the project, understand the parameters. And then we pay both sides for the first million dollars of the project. So you get paid twice as much. And we do that again. Because, you know, having worked in the economic development world, I know the way a lot of commercial real estate agents and developers think about the public sector. And I want to again, mitigate that risk that that that thought process that we’re going to try and screw you over if you bring us a deal. And so I want everything out there on the front end. So you feel comfortable coming to us and working with us.
J Darrin Gross 1:03:42
Now that’s great. I appreciate you sharing that. Hey, Eric, where can listeners go if they would like to learn more or connect with you?
Eric Voyles 1:03:49
Our website is www dot Tex t x America with an S center.com. Tex America’s center.com.
J Darrin Gross 1:04:04
Yeah. Eric, I want to say thanks again for taking the time to talk today. I’ve enjoyed our talk, learned a lot. And I look forward to doing again soon. Great.
Eric Voyles 1:04:15
Thank you very much, Darrin, and really appreciate the opportunity. Thank you, sir.
J Darrin Gross 1:04:19
All right. For our listeners. If you like this episode, don’t forget to like, share and subscribe. Remember, the more you know, the more you grow. That’s all we’ve got this week. Until next time, thanks for listening to commercial real estate pro networks. CRE PN Radio.
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